There’s an excellent post by John Carney, CNBC’s Senior Editor, on the mechanics of lending, deposit creation, and how these interact with regulatory and capital requirements. Highly recommended:
http://www.cnbc.com/id/100497710
I’ll have a crack at modeling this in Minsky shortly; I have already done a similar model to illustrate why reserves lag deposits in almost all countries, so it shouldn’t be too difficult to knock this illustration up in it.
